[WarOnPrivacy]

> Has private equity ever done anything good for anyone outside of the investors?

If it's not publicly traded, it's super secure from any public accountability.

And while I'm increasingly hostile toward the shareholder model, we do get one transparency breadcrumb from this (gov managed) contrivance: The Earnings Call

Earnings Calls give us worthwhile amounts of internal information that we'd never get otherwise - info that often conflicts with public statements and reports to govs.

Like CapEx expenditures/forecast and the actual reasons that certain segments over/underperform. It's a solid way to catch corporations issuing bald-faced lies (for any press, public, gov that are paying attention).

    AT&T PR: Net Neutrality is tanking our infra investment
    ATT's EC: CapEx is high and that will continue

I'll bet 1 share that there are moves to get this admin to do away with the requirement.

[ineedasername]

>I'll bet 1 share...

I won't be your counterparty on that bet, you've already won:

https://www.forbes.com/sites/saradorn/2025/09/15/trump-wants...

One of the reasons cited? All the work it takes. Which is just an insane response. If your business is so poorly run and organized that reconciling things each quarter represents a disproportionate amount of effort, something is very wrong. It means you definitely don't know what's going on, because by definition you can't know, not outside those 4 times a year. In which case there's a reasonable chance the requirement to do so is the only thing that's kept it from going off the rails.

[randerson]

I rarely agree with Trump, but I'm a former exec at a public company and he's not wrong. You need a horde of lawyers and accountants and investor relations and SOX compliance people and auditors etc for the earnings reports. SOX adds burdensome processes at every layer of the organization. Your CFO and CEO will be preoccupied by earnings. It's a real disincentive for a small/medium cap company to go (or stay) public. A PE firm taking a company private can get rid of all this overhead on Day 1.

Not to mention, quarterly reports incentivize a company to focus on the current quarter instead of longer-term sustainability. Reporting twice a year doesn't solve all the above problems, but it sure would reduce them a little.

[brendoelfrendo]

Worth noting, though, that the SOX "burden" came out of Enron and WorldCom. I'd be willing to debate the actual mechanics of the burden and see if streamlining the regulations for modern companies is possible, but I won't accept that the burden is unjustified.

[randerson]

Yes, opaque accounting was a real problem. I would love to see a more streamlined, modern take on SOX. Today's SOX, in practice feels like a box-checking exercise and mandatory funneling of money to accounting firms who don't understand the intricacies of (among other things) modern software development. They forced inefficient processes on my company and weren't willing to discuss smarter solutions. No doubt there are better SOX auditors & consultants than I dealt with. But its part of the reason companies now stay private for longer and prefer secondary rounds for employee liquidity. So now retail investors miss out on the action, while accredited investors have even less transparency than a pre-SOX public company.

[brookst]

Twice a year reporting also makes it easier for insiders to cash out before bad news becomes public.

[randerson]

Almost all insiders file trading plans far in advance as a defense against accusations of insider trading. Twice-a-year reporting actually makes it harder for insiders because they will have to file their trading plans further in advance. And it doesn't stop shareholders from suing insiders if they believe there was actual insider trading.

[brookst]

Wait, where in this proposal did you see a change in requirements around planned selling? My assumption, perhaps unfair, certainty supported by trends in US lawlessness, is that the whole scheme is to change reporting but not windows for planned sales.

[raw_anon_1111]

There is a huge difference between reconciling things for your own business strategy and reconciling things in accordance with federal public company reporting standards for publicly traded companies.

These standards are different than IRS reporting.

[ineedasername]

That doesn’t change anything: there isn’t anything in the reporting requirements that I can look at and say “that’s useless I wouldn’t want to know that about my business”

[raw_anon_1111]

There are entire classes in graduate school (I am an MBA dropout) that specifically focus on Management Accounting used to make internal decisions that are different than the accounting that you have to do for public accounting.

I don’t care about the GAAP depreciation guidelines when I’m deciding something if my own internal metrics show that I can get twice the useful life out of equipment

[CamelCaseName]

There's a huge difference between internal and external reporting from an effort and benefit perspective.

[GolfPopper]

>If it's not publicly traded, it's super secure from any public accountability.

Under the existing legal and regulatory model, yes.

But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse.

[JumpCrisscross]

> what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits, wide-spread vigilantism, and/or some sort of collapse

The endpoint of vigilantism and collapse is more economic opacity. Not less.

My personal view is companies with more than any of 1,000 employees, $10mm revenue or a $100mm valuation should have to file a simple annual disclosure showing the cap table ad balance sheet, a simple P/L, list of >5% beneficial owners and their auditor. But the path to that is through legislation in a complex, stable society.

[AnthonyMouse]

Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person.

And how are you going to calculate valuation for a closely held private company? In particular, how are you going to calculate it without making them do the thing you don't know if they're required to do without having the calculation already?

[JumpCrisscross]

> Those are single-member LLC revenue numbers

My thinking was it should be simple to produce. Maybe for revenue only you eliminate the balance sheet and maybe P/L or cap table requirements.

> how are you going to calculate valuation for a closely held private company?

I was thinking headline valuations, but you’re right. Skip valuation.

[cycomanic]

> Those are single-member LLC revenue numbers. You can get $10M in revenue just by being in a low-margin business. For industries with a 1% margin that's $100k a year in net income, i.e. wages and benefits for one person.

I'm not sure I understand your argument? Wages come out of revenue not income? So the $100k would go to the owners, but as captical gains not wages.

[AnthonyMouse]

It's a single-member LLC. The person doing the labor and the person who owns the company are the same person and whether they pay themselves the money as wages or dividends is not really the issue.

A thousand employees is a business on the scale of a mid-sized bank or companies like VeriSign or LendingTree or Iridium Communications. Companies with something like a billion dollars in revenue. $10M in revenue is a small business.

[JumpCrisscross]

> It's a single-member LLC

Maybe exempt pass-throughs?

[stonemetal12]

So? At 10M revenue what are the chances they don't have an accountant who does their taxes and already has all the relevant info? Asking their accountant to crank out one extra form is not going to break the bank.

[WarOnPrivacy]

> But what abusing that model long-term will eventually result in government-level change that effectively bans the existence of such exploits

After a couple of generations watching my government become increasingly captured by the lobbyists funding elections - I'm fairly skeptical that your optimistic assertion will come to pass.

Doubly so now that capture is rapidly accelerating into a hostile, fascist takeover.

[EGreg]

I'd even go so far as to say that shareholding in PUBLICLY TRADED companies is one of the primary engines of enshittification. Shareholders want to extract rents from the ecosystem, full stop. And if the CEO isn't sociopathic enough about it, they’ll replace them with one who is. Everyone who buys shares at price X wants to sell at >X, forever. That incentive structure alone guarantees a race to the bottom.

How to fix it: let shareholders be gradually bought out—much as slaveholders in Europe were—by (gasp) utility tokenholders. Think Shares in Disney Corp vs Disney Dollars. You transition from extractive shareholders to people who actually use and depend on the ecosystem. That eliminates the parasitic shareholder class that drives most of late-stage capitalist enshittification, rent extraction, and negative externalities.

For clarity, here are just some of those externalities that flow directly from quarterly-earnings-driven incentives:

  destruction of ecosystems
  deforestation and rainforest loss
  collapse of fisheries and ocean systems
  factory farming / industrialized animal suffering
  desertification of farmland
  strip mining and toxic waste dumping
  privatization and depletion of freshwater
  carbon emissions and climate destabilization
  environmental injustice and poisoning of local communities
  lobbying to block regulation and accountability
  social media addiction design for engagement metrics
  monopolization and killing off smaller competitors
  offshoring, wage stagnation, and worker precarity
  financialization of everything (housing, healthcare, education)
  political capture to preserve the whole machine

This is not some random accident, this is the inevitable equilibrium of shareholder primacy.

The entire model of late-stage shareholding is flawed. Corporations exist because governments grant them charters. Government sets the rules for how shares work—and can change those rules. Buying shares is not like buying bonds. Shares are residual claims with far higher risk. So we can absolutely add another risk: that shareholders may be gradually bought out and the institution wound down, the same way the FDR administration forced private gold holders into a buyout under the Gold Reserve Act.

That was far more authoritarian, because gold is a physical asset you own in self-custody. Shares, on the other hand, only exist because a third-party company continues to operate in ways that profit you. That dependency already implies higher risk. Therefore, we can add the additional risk of a structured, government-mandated transition away from extractive shareholder capitalism—just like Europe did when ending slavery. And let's be honest: late-stage financialized shareholding has been a blight on the planet.

And none of this is historically radical. Before the modern era, the idea that shareholders should dominate everything simply didn’t exist.

Pre-1960s:For much of the 20th century, a broader "stakeholder theory" was the norm. Management balanced employees, customers, suppliers, and communities—not just shareholders.

1960s:The turn began with Milton Friedman’s argument that a company’s only responsibility is maximizing shareholder profits (1970 NYT Magazine). 1980s:Shareholder primacy took over.

  Hostile takeovers forced boards into short-termism.
  Executive compensation was tied tightly to stock price.
  Financialization embedded all of this into corporate DNA.

Shareholders were not always in control. Their dominance "waxed and waned," and the current form of shareholder primacy is a late-20th-century financial ideology posing as an eternal law of nature.

If that ideology got us enshittification, ecological collapse, and a sociopathic corporate culture, then yes, we can fix it the same way other harmful institutions were fixed: buy the incumbents out and transition to a saner governance model.

[maest]

While I get your frustration, the root cause of the issue is not shareholder value maximisation, it's the failure modes of the free market.

Monopolies, lack of transparency, lack of competition, regulatory capture, failure to price in externalities are what allows this to happen.

And these failure modes are allowed to persist due to lobbying, normalised corruption, and the desire for a small/weak government.

The latter is useful for corporations, as it limits regulation, which is the main way these failure modes are supposed to be managed. Yes, too much/bad regulation is detrimental, but so is no/weak regulation.

The more baffling thing is that the modal American voter supports lax regulation and pro-corporate rules at their own personal expense.

[addicted]

I'm curious what you think VCs, etc. who are investing in all these private companies want to do?

The only difference with public companies is we actually have data about their finances.

The private companies are doing it all under wraps.

[raw_anon_1111]

Don’t conflate two different investment models.

1. Investors who want to invest in companies with a growth story and want the company to grow bigger and be “successful” enough to exit either via an acquisition or the public market. But often times these days, just to pawn off to the greater fool.

https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-...

2. Investors who want to go in and make the company worse and do enough value extraction for short term gains. The canonical case is when a restaurant chain owns its own real estate. They split off the restaurant from the underlying real estate and make the restaurant pay rent that goes up. The restaurant flounders and the real estate holdings increase in value.

And another strategy is to acquire companies in your vertical, roll them all up, fire redundant staff and integrate systems and then exit. Of course you enshitify the smaller once independent mom and pop systems in the process.

[spockz]

We can still have shares and pay out dividend. Then when you want to sell your shares they are like a fixed price?

[EGreg]

There can be many models. One model is just to have shares expire after a certain point, the same way options do. Or undergo demurrage (a discount that grows from 0 to 100% over a decade, for instance, where the remaining % from the sale goes back to the ecosystem and is distributed as UBI to all tokenholders).

In fact, staking your shares and getting a perpetual flow of utility tokens, or selling the shares, could be a good compromise. But the shares would cease to confer voting power or dividends. The dividends would be paid out in the utility token itself. So the utility tokens might get devalued if there are too many of them, or they could be burned as transaction fees for instance, reducing their supply. There are a ton of possibilities.

Reinterpreting shares as something like a bond with a yield in the ecosystem's own currency makes things much more sustainable. Yes, the shareholders would still want the ecosystem's growth to outpace the token issuance, but also, they could just increase the fees' burn rate of tokens. But that's like extracting rents. So yes, I think eventually, shares should simply get less and less dividends over time. Look at the Miracle of Worgl and their currency undergoing demurrage, for instance.

In the ideal scenario, though, new companies would have no IPO ever, only ICO of utility tokens. Just make IPOs almost impossible to do from a regulatory point of view. It's becoming rare anyway. This would mean that early shareholders would get their returns by staking shares and receiving utility tokens which they sell to ecosystem participants (so they're incentivized to help grow the entire ecosystem, refer new customers etc.) And eventually, the market cap of the shares is totally phased out due to demurrage and the utility tokens is all that remains.

[spockz]

Or perhaps we go one step further by making shareholders also owners. They get to take their part (as determined by the amount of shares they possess) of the profits and equally have to cough up their part of the losses.

This would return closer to the model where you invest into a business because you believe in it.

[salawat]

Stop trying to reimagine stocks as crypto to try to justify a failed attempt at manifesting a problem that cryptocurrency can attempt to be a solution to.

[EGreg]

Stop hating on crypto just because you're on HN, and consider that actual problems have grown very large with current systems. This is the problem with many HN denizens -- they keep correctly posting about problems, but then dismiss solutions out of hand because they're against the groupthink. Then 10 years later the problem is worse, but you get triggered by the word "cryptocurrency" (which by the way I didn't even say).

As a result, you totally ignore the very real problems that get bigger and bigger due to late-stage shareholder capitalism, and call it a "failed attempt to manifest" the problems.

[salawat]

I'm not saying this out of groupthink. If you just change the word "stocks" to "token", and don't change the fundamentals of ownership of "stocks" being basically indicated by entries in the ledger of an asset tracking company, that provides a foundation for conducting trades for financial gains at the stroke of a pen you've accomplished nothing. In the transformation to tracking the same damn thing with a block chain or crypto token, if you're providing the same abstractive benefits, you've got nothing but a change in detail, but not in kind. Tokens will be traded on info or trends as monied interest recognizes value to be squeezed out of the fact of owning a share, having voting rights/influence on operations, or claim to a flow of future value. Same shit, different wrapper, it's just a token now, and we're blowing eith bookoo power doing PoW, or creating more centralization through PoS, to process transactions that were previously accomplished with an entry in one of a handful of company's databases, and some paperwork.

So if you want to sell tokenization as not being stocks/shares by another name, tell me how you're changing the fundamentals. I buy into ventures to say, get dividends, or knowing I'll lose money, but hoping to see something manifest that I want to see that may not be profitable yet, but I want to be a part of. How does your change to tokens differ at all, from me buying shares of stock?

If you can't provide an answer to that, I continue to stand by my original statement. Unless, of course, you're being a proponent of a public database of beneficial ownership of all legal fictions. In which case you might get some interest out of me, but I guarantee you'll run into other forms of Dead on Arrival until you fix/address the whole problem around said database basically provides a map for targeting all of the top centralizations of capital, which none of those individuals will probably be okay with being the case to the degree it will be prevented through buying out political clout.